I Have Heard this Story Before
I think that I know the ending of this one. Financial institutions tell everyone that they really, really know what they are doing. Then they foul up, egregiously. And taxpayers wind up bailing them out.
Just some more detail from the WSJ: Mortgage Securities Back Fed Loan to Bear Stearns.
The securities backing a $29 billion Federal Reserve loan to Bear Stearns Cos. consist primarily of "mortgage-backed securities and related hedge investments," the Treasury Department said.
...
The Fed has declined to provide any underlying detail so far.
JPMorgan will take the first $1 billion in losses on the $30 billion portfolio, and the U.S. taxpayers will pay for the remaining losses (if any).
Yes, it is a good thing that the soi-disant grown-ups are fouling up the government again. Of course, they are the same people who do not believe in government, so there is no reason to think that they have any incentive to show that the government can do things right.
Labels: bailout, mortgage-backed securities, stupid financial tricks